China Chengtong and CSIC jointly promote debt-for-equity project

On August 24, the signing ceremony of China Chengtong Holdings Group Ltd. (China Chengtong or the Group) and China Shipbuilding Industry Corporation (CSIC)’s strategic cooperation and market-oriented debt-for-equity swap project was held in Beijing. The Group’s President and Chairman of China Structural Reform Fund Corporation Limited (CSRF) Zhu Bixin, CSIC’s President Sun Bo addressed the signing ceremony. The Group’s Vice-President Li Yousheng and Tong Laiming, and CSIC’s Vice-President Jiang Renfeng and He Jiwu attended the ceremony.

CSIC’s debt-for-equity swap project, featuring a milestone and having significant market model leading effect, is the first real market-oriented debt-for-equity swap project since the government has actively and prudently promoted the reduction of corporate leverage. In order to lower the corporate debt ratio and reduce financial cost, CSIC has introduced third party investors through market-oriented approach to realize the replacement of creditor's right to equity. CSRF has invested RMB 2.216 billion to actively participate in CSIC’s market-oriented debt-for-equity swap project, which is an important measure taken by CSRF to implement the government’s encouragement to state-owned capital investment and operation companies and qualified funds affiliated to central state-owned enterprises (SoEs) to participate in market-oriented debt-for-equity swap, and is of great significance to steadily lower central SoEs’ debt ratio.

In Zhu Bixin’s speech, he said that it was China Chengtong and CSRF’s strategic position and important mission to optimize the layout of state-owned economic structure, promote the transformation and upgrading, enhance market competitiveness, and improve the efficiency of state-owned capital operation. CSRF’s active participation in CSIC’s market-oriented debt-for-equity swap project indicated CSRF’s implementation of the national military-civilian integration strategy and active and steady promotion of the requirement to central SoEs for reducing corporate leverage, and also gave full play to CSRF’s capital advantages and exemplified its mission of assisting central SoEs’ structural reform and transformation and upgrading. China Chengtong and CSRF were willing to take the opportunity of this cooperation to build a multi-level and comprehensive strategic relation with CSIC, deepen the cooperation in fund investment, logistics supply chain services, financial services, capital operation, asset management and other aspects, in order to make greater contributions to promoting CSIC’s structural adjustment and transformation and upgrading.

Sun Bo said in his speech that CSIC and China Chengtong’s strategic cooperation was against the backdrop of the implementation of the supply-side structural reform and the “five priority tasks” (take solid and effective steps to cut overcapacity; take targeted policies to cut excess urban real estate inventory; carry out deleveraging in an active and prudent way; take multiple measures to cut costs; take targeted and powerful measures to strengthen areas of weakness), to which the CPC Central Committee and the State Council attaches great importance. CSRF’s participation in China’s first market-oriented debt-for-equity swap project responded to the CPC Central Committee and the State Council’s call on the supply-side structural reform, showed CSFR’s sharp political awareness and demonstrated its marketing philosophy. As a pilot central SoE for state-owned capital operation, China Chengtong’s advantages in professional capital operation and financing would help CSIC deepen its structural reform and create conditions for accelerating the transformation and upgrading. In the future, CSIC would cooperate with China Chengtong to carry out multi-level and multi-field cooperation in the capital market, and strive to make CSIC an innovative leading enterprise to make greater contribution to the national strategy of building China into a maritime power.

Zhu Yue, the Group’s Assistant to the President; Wei Ran, General Manager of Chengtong Fund Management Co., Ltd. (Chengtong Fund); Zhu Xiaozheng, Director of the Group’s Office of the President; Dong Zhiguang, Director of the Group’s Department of Strategic Management; relevant personnel from Chengtong Fund and CSIC attended the ceremony.